Monday, November 9, 2009

Some people think that the oil and car companies are the primary lobbyists trying to "deny" the supposed fact of carbon-induced global warming, because it will apparently hurt their industry. Well, I thought about this from an oil-owners position and asked myself: "What would I do?"

If I was invested in oil, I would not care less if the demand for (and therefore sale price) of oil was destined to go down as a consequence of new carbon taxes. Why should I care? I would simply sell out of oil and re-invest in other stuff, laughing at all the guys who bought my soon-to-be depreciated stocks.

Maybe the most powerful players (vested interests) are not into oil, cars, land, McDonald's or whatever...they may only be into stocks. Traders don't care for the status of any given company; they are only into trading, and trading based on whatever way the stock market is foreseeably going to go. And indeed, the more volatility in the stock markets the better, because that provides for more opportunity to sell out of whatever low performing (or more specifically soon to be low performing) stocks that you have, and to likewise buy-up other real assets that are destined to inflate at the time. As a trader, you can't get super rich without volatility. If stocks always sold at real [medium/long-term yield-based] values, and the supply-to-demand game was essentially stable, then you would have to wait for your wealth to appreciate at only about 3-4% a year, and that is much too long for $$billions. Putting it simply: You can't buy low and sell high if the markets aren't going up and down in the first place.

The most influential vested interests may not be the Corporations as such, but the super rich traders (whoever they are, exactly?). We should consider this before we assume that "climate change deniers", of example, are just paid-off oil interests. As I have already stressed, an intelligent trader who only cares about money will also only care for volatility in the market place. Indeed, the only thing a trader should be afraid of is a fundamental long-term reduction in demand: that is, a world evolving away from a dependency on the products provided by the industrialised economy (and stock market) altogether. (My Club Economies system could be an example of that. Regulations for the removal of planned obsolescence is another).

So if the world is driven by unscrupulous vested interests, and it happens to be that the most powerful interests are stock owners/traders, then we should see this primarily through the event of [designed?] economic volatility. That should be the game; not picking industry favourites as such.

Example: Al Gore provides a good example of what I am talking about. He has been central to the movement to reduce global demand for oil, and has also invested in alternatives to oil. I cannot prove or disprove the integrity of his motives, but the fact is he is set to make an enormous amount of money from playing the game that he has personally manipulated. You cannot dismiss the possibility that personal financial gain may have been a core part of his motive to produce the "Inconvenient Truth" movement.

Note: I have previously expressed in this blog that there is the concern about competitive forces driving society into a hyper profit-focused mode where the bottom-line becomes everything, and with the danger of this dynamic becoming very serious for when governmental manipulation becomes part of the competitive game.

Though I believe the competitive dynamic is logical and real, I can appreciate that the trader dynamic could, over time at least, render the competitive dynamic subordinate to its impact. This is because a powerful trader/s who has a greater than 50% share over a given major company could, potentially, deliberately destroy industry-A so as to inflate the demand and value of industry-B, while trading with inside knowledge so as to stay on top and make a greater final profit. Again, it's the feeding-volatility effect. If you're a trader then all you have to do is ride with the monetary waves, especially if you can know in advance about where those prices are going because you are economically powerful enough to control the dynamics behind them.

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Andrew Atkin

The Great New Zealand Housing Disaster: Click on The Real Deal, below.

Why would you buy a home for $500k when you can build a new home for $200k at the city fringe? Answer: Because you can't build a home for $200k at the city fringe. Because the cost of land has been artificially inflated, and to the point of ridiculous. This is the heart of the reason why housing in New Zealand has been able to inflate to such extraordinary degrees. The supply response to increases in demand has been deliberately choked off. At base, this so-called complex issue really is that simple.